Libya has stopped issuing entry visas to citizens of most European countries, in an apparent escalation of its diplomatic row with Switzerland.

The visa suspension emerged a day after a Libyan newspaper reported that the North African country would take 'severe measures' in response to Switzerland drawing up a visa blacklist that included Libyan leader Muammar Gaddafi and members of his family.

A notice on France's foreign ministry website said Libya had suspended visas for the Schengen area - 25 European countries, including some which, like Switzerland, are not in the European Union.

EU members Britain, Ireland, Romania, Bulgaria and Cyprus are not in Schengen.

Italy's Foreign Ministry also confirmed that Libya, which has Africa's largest proven oil reserves, had suspended visas.

'Contacts are under way between the countries of the zone to coordinate over this measure,' a ministry spokesman said.

The visa suspension risks damaging Libya's reputation as a reliable business partner.

Foreign investment has grown since United Nations sanctions were lifted in 2003, but some investors say arbitrary decisions by officials hinder business.

No explanation was given for the suspension, and there was no official confirmation from the Libyan government. The French ministry said the measure took effect on Sunday without warning.

Libya has been locked for months in a row with Switzerland over the brief 2008 arrest of one of Gaddafi's sons in Geneva, and the subsequent prosecution of two Swiss businessmen who had been working in Libya.

Libya's Oea newspaper reported on Sunday that Libya would retaliate against what it said was Switzerland's decision to deny entry visas to a list of 188 Libyans, including Gaddafi, members of his family and other senior officials

'Severe measures, based on the principle of reciprocity, will be taken if it (Switzerland) does not renounce its decision before it is too late,' the newspaper cited an unnamed senior Libyan official as saying.

In July 2008, Swiss police arrested Gaddafi's son Hannibal at a luxury lakeside hotel in Geneva on charges - which were later dropped - of mistreating two domestic employees.

After the arrest, Libya halted oil exports to Switzerland and withdrew more than $5 billion assets from Swiss banks.

Tripoli also barred two Libya-based Swiss businessmen, Max Goeldi and Rachid Hamdani, from leaving the country and later charged them with visa violations and other offences. Libyan officials say their case is not linked to the Geneva arrest.

Switzerland has not publicly acknowledged the existence of a visa black-list for Libyan officials, but Swiss media has said the list is designed to target Muammar Gaddafi's inner circle.

Swiss officials have said that other states in the Schengen zone have backed Switzerland's line on issuing visas to Libyans.

According to media reports, Libyan officials last year complained that since the dispute with Switzerland broke out, some Libyans have experienced difficulty receiving entry visas from several other Schengen zone countries.